Accounting Standards Codification
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In US accounting practices, the Accounting Standards Codification is the current single source of United States Generally Accepted Accounting Principles (GAAP). It is maintained by the Financial Accounting Standards Board (FASB).
FASB Accounting Standards Codification
The codification is effective for interim and annual periods ending after September 15, 2009. All existing accounting standards documents are superseded as described in FASB Statement No. 168, The FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles. All other accounting literature not included in the Codification is non-authoritative.
The Codification reorganizes the thousands of U.S. GAAP pronouncements into roughly 90 accounting topics and displays all topics using a consistent structure. It also includes relevant U.S. Securities and Exchange Commission (SEC), guidance that follows the same topical structure in separate sections in the Codification.
To prepare constituents for the change, the FASB has provided a number of tools and training resources.[1]
While the Codification does not change GAAP, it introduces a new structure—one that is organized in an easily accessible, user-friendly online research system. The FASB expects that the new system will reduce the amount of time and effort required to research an accounting issue, mitigate the risk of noncompliance with standards through improved usability of the literature, provide accurate information with real-time updates as new standards are released, and assist the FASB with the research efforts required during the standard-setting process.[2]
Goal
The three primary goals of the codification is "simplify user access by codifying all authoritative U.S. GAAP in one spot, ensure that the codification concent accurately represented authoritative U.S. GAAP as of July 1, 2009, and to create a codification research system that is up to date for the released results of standard-setting activity."[2] The codification was made to make accounting standards easier to find through a single data base.
Leading up to the Codification Process
Before the Codification, accounting standards lacked a consistant and logical structure. For the last 50 years, U.S. GAAP was comprised of thousands of standards with multiple standard setters. The old U.S. GAAP was difficult to interpret and the complexity of the standards made it hard for users to stay up to date. Problems with the old standard increased financial reporting risk and lead to inefficiencies that increased cost. FASAC then voiced there concerns due to the increase of financial reporting guidance from the old U.S. GAAP standards and FASB responded by launching a new project to codify the standards. The project was approved in September 2004 by the Trustees of the Financial Accounting Foundation.[2]
Public Access to Codification
All users must register to view any codification information. The codification allows a free basic view or paid professional view to the public. The professional view requires an annual subcription up to $940 depending on concurrent users. [3] Discounts may apply to multiple concurrent users. [4]The codification is used by accounting and reporting professionals, analysist, and investors.
Structure
Each ASC reference is structured as a series of four numbers separated by dashes: a three-digit Topic (the first digit of which represents an Area), a two-digit Subtopic, a two-digit Section, and a two- or three-digit Paragraph. [5]
| Topic Series | Area |
|---|---|
| 100 | General Principles |
| 200 | Presentation |
| 300 | Assets |
| 400 | Liabilities |
| 500 | Equity |
| 600 | Revenue |
| 700 | Expenses |
| 800 | Broad Transactions |
| 900 | Industry |
Subtopic 10 is always "Overall."
Section numbers are standardized across topics (not all subtopics have all sections):
| Section number | Section title |
|---|---|
| 00 | Status |
| 05 | Overview and Background |
| 10 | Objectives |
| 15 | Scope and Scope Exceptions |
| 20 | Glossary |
| 25 | Recognition |
| 30 | Initial Measurement |
| 35 | Subsequent Measurement |
| 40 | Derecognition |
| 45 | Other Presentation Matters |
| 50 | Disclosure |
| 55 | Implementation Guidance and Illustrations |
| 60 | Relationships |
| 65 | Transition and Open Effective Date Information |
| 70 | Grandfathered Guidance |
| 75 | XBRL Elements |
For instance, 210-10-20 is Balance Sheet, Overall, Glossary. 605-40-25-1 is Revenue Recognition, Gains and Losses, Recognition, first paragraph.
See also
References
- ^ Financial Accounting Standards Board. News Release, 07/01/09.
- ^ a b c "FASB Accounting Standards CodificationTM Notice to Constituents (v 2.0)" (PDF). Financial Accounting Standards Board. Jul 1, 2009. Retrieved Oct 21, 2017.
{{cite web}}: Cite has empty unknown parameter:|dead-url=(help) - ^ "FASB Accounting Standards Codification®". asc.fasb.org. Retrieved 2017-10-22.
- ^ "FASB Accounting Standards Codification®". asc.fasb.org. Retrieved 2017-10-22.
- ^ "Codification Learning Guide". Financial Accounting Standards Board. October 26, 2015. Retrieved April 22, 2017.